AAT L4 Business Tax Computations 2

Question 1

A limited company has accounting profits of £180,000. It includes depreciation of £20,000 and capital allowances are £35,000. The company donated £5,000 to a political party (non-deductible). What is the taxable trading profit?

Accepted Answer

£160,000

Answer

Start with accounting profit £180,000. Add back depreciation (£20,000) and political donation (£5,000) = £205,000. Deduct capital allowances (£35,000) = £170,000. Wait — add back donation: £180,000 + £20,000 + £5,000 − £35,000 = £170,000.

Question 2

For corporation tax purposes, what is the time limit for submitting a company tax return (CT600) after the end of the accounting period?

Accepted Answer

12 months

Answer

A company must submit its CT600 corporation tax return within 12 months of the end of its accounting period, regardless of when tax is due to be paid.

Question 3

A company purchases plant and machinery for £100,000. It qualifies for the Annual Investment Allowance (AIA). The AIA annual limit is £1,000,000. What capital allowance can the company claim in the first year?

Accepted Answer

£100,000 (full AIA)

Answer

The AIA allows a 100% first-year deduction on qualifying plant and machinery purchases up to the annual limit. Since £100,000 is well within the £1,000,000 AIA limit, the full £100,000 can be claimed.

Question 4

A company makes a trading loss of £80,000 in its accounting period. It had trading profits of £50,000 in the previous year. Under terminal loss relief / loss relief rules, what is the maximum the company can carry back?

Accepted Answer

£50,000 (the previous year's profits)

Answer

Trading losses can be carried back one year under s37 CTA 2010. The maximum that can be relieved against the previous year is limited by the previous year's profits (£50,000). The remaining £30,000 is carried forward.

Question 5

A company's corporation tax liability is £180,000 and it is not a 'large' company. When must this tax be paid?

Accepted Answer

9 months and 1 day after the end of the accounting period

Answer

Non-large companies must pay corporation tax 9 months and 1 day after the end of the accounting period. Quarterly instalments only apply to large companies (profits over £1.5m).

AAT Level 4 Practice Test

AAT Level 4 Practice Test

AAT L4 Business Tax Computations 2